I've only recently begun researching COBR, but my initial impressions are unfavorable. Quickly, the reasons why are:
1) Consistent losses between 2006-2009. Operating margins were just 0.7% in 2010. EPS excluding extraordinary items was just 12 cents in 2010.
2) The y/y return to profitability was driven largely by a reduction in SG&A, specifically marketing expenses. The company is doing fewer trade shows, etc.
3) 2010 revenue of $110m represents 4% y/y growth from $105m, a pretty weak bounce back considering revenue collapsed from $156m back in 2007.
You look at the industry they're in- mature and competitive- and you look at their performance and its tough for me to understand why anyone would be bullish. With margins so narrow they are extremely vulnerable to declining sales. And I think that the baseline assumption for revenue in the next several years should be flat/modestly down given their weak bounce back from the recession thus far.
I guess I'm skeptical of "new product" driven growth in such a mature industry.
Do any informed bulls want to fill me in on what I'm missing? Thanks in advance.
Basically, yours is the "glass is half empty" (or totally empty) perspective. The glass is half full perspective would see this as a company that is increasingly "burnishing" its brand name, and corporate reputation as a consumer electronics (and "hip" and higher end consumer electronics) company. Distribution in Apple stores of COBR product is a whole new ballgame, and whole new visibility. Product awards from Mac and other magazine. Trade Show awards. I guess that could amount to nothing, but personally, I think there is an increasing chance that our company becomes viewed as a potential "platform" for growth for another, much deeper pocketed entity. Is it more attractive at $4.15 now than $1, a few years ago. Probably not, but not out of the question, considering the increased visibility on the Street we have, the return to profitability, and the potential operating leverage IF any of the new products achieve success.
And I still ask whether controlling roughly 2/3 of both the CB market, and the radar detector market, in the U.S., is something to sneeze at...or otherwise justifies only a $25+ million market cap.